Capital Gains/Losses
The Capital Gains Worksheet will calculate complex capital gains/losses and the results integrate to the return. Calculations that amount to $10,000 or more will integrate to the Capital Gains Schedule (BW).
Each Capital Gains worksheet identifies the following categories of capital gain/loss:
Unindexed and non-discounted capital gains (for assets held less than 12 months) and Frozen Index capital gains (described as Other gains)
Discount capital gains (that is, all gains with the discount percentage applied)
Small business Capital Gains concessions, including the 50% Active Asset reduction, 15-Year exemption, and the Roll-over and Retirement exemptions.
Current year capital losses
Prior year capital losses
Each Capital Gains worksheet is accessed from a Capital Gains Index of worksheets related to the same return. From each worksheet, separate indexes of items in each category may be maintained. For more information, refer to Capital gains worksheet data entry gains worksheet data entry.
Applying Losses
For Category A assets (Collectables) and Category P assets (personal use assets), disposals are segregated in their individual categories. Collectable losses can only be applied against collectable gains and Personal use assets capital losses are lost.
Previously, current and prior capital losses of any category (for example, shares) were first applied to current year gains of that category. Any residual capital losses would then be applied to other gains.
Under the new provisions, before losses are applied, any asset must be 'grossed up' to its nominal value (that is, the value of the gain prior to applying any Discount, 50% Active Asset Exemption, Retirement, or Roll-over exemption that may be available). The new provisions then allow the taxpayer to choose how to apply the various classes of capital losses to capital gains.
Tax applies losses in the standard order:
Current capital losses before prior year capital losses;
- Capital losses first to any unindexed or frozen index gains; and
- Any remaining capital losses to the discount capital gain (prior to discounting).
